Does your Business need Cyber Insurance? Amanda Stevenson, Account Executive, Gallagher Insurance
Is your business likely to be threatened by cyber risk? Absolutely. If you’ve got an internet connection you’re at risk of an attack or incident that could potentially close you down or inflict financial damage. Small businesses aren’t exempt: over a third of global cyber-attacks target companies with less than 250 employees. Every business needs cyber protection. That's where cyber liability insurance comes in. Cyber liability insurance protects your enterprise from the financial impact of losing or compromising your own or other people’s information. This can take the form of personal or business data stored in your records.
Your Liability
If your business is hit by a cyber-breach the people or companies whose data has been compromised could sue you, and if you fail to notify the Office of the Australian Information Commissioner (OAIC) you could face penalties.
Are you Putting Yourself at Risk?
Loss of data can occur as a result of a targeted cyber-attack or human error factors such as losing paperwork, a memory stick or a device, failing to have adequate security on a device that’s used for both personal and business purposes or if your network provider’s system is compromised. Worryingly many Australian businesses are unprepared for dealing with a cyber-incident and this is especially true for small to medium sized enterprises (SMEs). Almost half the SME respondents in a recent survey by insurance company Chubb were unaware of their obligations under the Notifiable Data Breaches Scheme, only 40% thought that their revenue or sales would suffer and only 27% had cyber insurance.
Financial Fallout
Impacts that affect your business internally can also be expensive, especially if an attack closes your systems down. You would suffer loss of income, you would probably need to hire an expert to save or retrieve your important data and you might need to engage damage control services to help limit loss of customers and reputation. Interruption to normal operations represents a loss to any business because you have to maintain your running costs, and small businesses are particularly vulnerable because they typically have less resources to call on and may in fact be servicing loans. Externally if the people or companies whose information has been compromised bring legal actions for damages or negligence against you you’ll have to pay the legal costs of answering the claim and any damages imposed, which could be crippling.
How do I transfer my cyber risk?
Most cyber insurance policies cover the costs of impacts to both your own business and external parties. Cyber insurance may be available as part of a business pack and exclude some risks or liabilities under its terms. A dedicated standalone cyber insurance policy is likely to be more comprehensive, offer higher caps on payouts and include provisions specific to containing and remediating a breach, and the costs involved.
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